Renovating a home can require significant upfront cash, especially when the property needs more than cosmetic improvements. Freddie Mac's CHOICERenovation mortgage offers eligible homebuyers and homeowners a way to finance qualifying renovation costs as part of their mortgage.
Instead of arranging separate financing for the improvements, this conventional renovation loan combines the mortgage and renovation financing into a single transaction.
What Is a Freddie Mac CHOICERenovation Mortgage?
CHOICERenovation is a Freddie Mac renovation mortgage available for eligible home purchases and no cash-out refinances. The proceeds can be used to finance renovations to a home you are purchasing or an existing property you are refinancing.
The program can be used with eligible fixed-rate and adjustable-rate mortgages, including certain Home Possible, HomeOne, and super conforming mortgages.
What Types of Properties Can Qualify?
CHOICERenovation is available for a range of eligible properties. These can include one- to four-unit primary residences, one-unit second homes, one-unit investment properties, and qualifying manufactured homes.
Eligible units in condominiums, planned unit developments, cooperatives, and leasehold estates may also qualify when applicable Freddie Mac and lender requirements are satisfied.
Why Consider a CHOICERenovation Loan?
One of the primary advantages is convenience. A homebuyer can purchase a property and finance eligible improvements with a single-closing mortgage rather than obtaining separate financing after the purchase.
This can be useful when you find a home with the location, layout, or other features you want but need to repair or customize parts of the property. Existing homeowners may also use the program with an eligible no cash-out refinance to finance improvements.
How Are Renovation Costs Evaluated?
Renovation financing requires planning before the work begins. Your lender will need information about the proposed improvements and renovation costs, and the property will be evaluated according to Freddie Mac program requirements.
CHOICERenovation transactions use the property's value after the planned improvements are completed when applicable to the mortgage calculation. This makes accurate renovation plans, estimates, and property valuation important parts of the process.
What Happens During the Renovation?
Renovation funds are handled according to specific program requirements rather than simply being provided to the borrower as unrestricted cash. The renovation work must be completed within the required timeframe, and a final inspection is required to document completion.
Because renovation projects can involve contractors, permits, inspections, and unexpected issues, borrowers should understand the lender's renovation process before closing.
What About Smaller Home Improvement Projects?
Freddie Mac also offers CHOICEReno eXPress for eligible smaller-scale renovation projects. This option can be used for improvements such as replacing windows and doors, roof repairs, painting, and minor remodeling.
For CHOICEReno eXPress, financed renovation costs are generally limited to 10% of the property's value, or 15% for properties located in designated Duty to Serve high-needs areas. Renovations must generally be completed within 180 days of the mortgage note date.
Is a CHOICERenovation Mortgage Right for You?
A renovation mortgage can be worth exploring when you want to purchase or refinance an eligible property and finance improvements through the same mortgage. Qualification, available loan amounts, property eligibility, renovation plans, and lender requirements all affect whether the program fits your situation.
Loan Wolf Lending can help Florida homebuyers and homeowners explore renovation financing options and determine which mortgage programs may fit their improvement plans. Call 754-755-3075 to discuss your renovation and financing goals.